Dynamic programming methods have been shown to scale much better because they exploit the tree structure by solving subtrees as independent subproblems.

In policy debates concerning the governance and regulation of Artificial Intelligence (AI), both the Precautionary Principle (PP) and the Innovation Principle (IP) are advocated by their respective interest groups. Do these principles offer wholly incompatible and contradictory guidance? Does one necessarily negate the other? I argue here that provided attention is restricted to weak-form PP and IP, the answer to both of these questions is "No." The essence of these weak formulations is the requirement to fully account for type-I error costs arising from erroneously preventing the innovation's diffusion through society (i.e. mistaken regulatory red-lighting) as well as the type-II error costs arising from erroneously allowing the innovation to diffuse through society (i.e. mistaken regulatory green-lighting). Within the Signal Detection Theory (SDT) model developed here, weak-PP red-light (weak-IP green-light) determinations are optimal for sufficiently small (large) ratios of expected type-I to type-II error costs. For intermediate expected cost ratios, an amber-light 'wait-and-monitor' policy is optimal. Regulatory sandbox instruments allow AI testing and experimentation to take place within a structured environment of limited duration and societal scale, whereby the expected cost ratio falls within the 'wait-and-monitor' range. Through sandboxing regulators and innovating firms learn more about the expected cost ratio, and what respective adaptations -- of regulation, of technical solution, of business model, or combination thereof, if any -- are needed to keep the ratio out of the weak-PP red-light zone. Nevertheless AI foundation models are ill-suited for regulatory sandboxing as their general-purpose nature precludes credible identification of misclassification costs.

Resource constraint prediction has to select the smallest/ cheapest set of sensors in order to make accurate decisions. A new approach to this problem is proposed in this paper where the authors basically define a deterministic Markov decision process and learn its policy applying cost sensitive learning in every state of the MDP. Given a new testing example to classify, the policy has to decide whether a new sensor should be queried (if yes, which sensor), or whether the prediction should be made with the current set of sensors measured. In line 44, the authors mention the "expected budget constraint". Please be clear about that because your paper is not budgeted learning; budgeted learning is more challenging, please see, e.g.

Credit scoring is a systematic approach to evaluate a borrower's probability of default (PD) on a bank loan. The data associated with such scenarios are characteristically imbalanced, complicating binary classification owing to the often-underestimated cost of misclassification during the classifier's learning process. Considering the high imbalance ratio (IR) of these datasets, we introduce an innovative yet straightforward optimized activation function by incorporating an IR-dependent asymmetric adjusted factor embedded Sigmoid activation function (ASIG). The embedding of ASIG makes the sensitive margin of the Sigmoid function auto-adjustable, depending on the imbalance nature of the datasets distributed, thereby giving the activation function an asymmetric characteristic that prevents the underrepresentation of the minority class (positive samples) during the classifier's learning process. The experimental results show that the ASIG-embedded-classifier outperforms traditional classifiers on datasets across wide-ranging IRs in the downstream credit-scoring task. The algorithm also shows robustness and stability, even when the IR is ultra-high. Therefore, the algorithm provides a competitive alternative in the financial industry, especially in credit scoring, possessing the ability to effectively process highly imbalanced distribution data.

Venezuelan banks have historically made credit card limit adjustment decisions manually through committees. However, since the number of credit card holders in Venezuela is expected to increase in the upcoming months due to economic improvements, manual decisions are starting to become unfeasible. In this project, a machine learning model that uses cost-sensitive learning is proposed to automate the task of handing out credit card limit increases. To accomplish this, several neural network and XGBoost models are trained and compared, leveraging Venezolano de Credito's data and using grid search with 10-fold cross-validation. The proposed model is ultimately chosen due to its superior balance of accuracy, cost-effectiveness, and interpretability. The model's performance is evaluated against the committee's decisions using Cohen's kappa coefficient, showing an almost perfect agreement.

A myriad of measures to illustrate performance of predictive artificial intelligence (AI) models have been proposed in the literature. Selecting appropriate performance measures is essential for predictive AI models that are developed to be used in medical practice, because poorly performing models may harm patients and lead to increased costs. We aim to assess the merits of classic and contemporary performance measures when validating predictive AI models for use in medical practice. We focus on models with a binary outcome. We discuss 32 performance measures covering five performance domains (discrimination, calibration, overall, classification, and clinical utility) along with accompanying graphical assessments. The first four domains cover statistical performance, the fifth domain covers decision-analytic performance. We explain why two key characteristics are important when selecting which performance measures to assess: (1) whether the measure's expected value is optimized when it is calculated using the correct probabilities (i.e., a "proper" measure), and (2) whether they reflect either purely statistical performance or decision-analytic performance by properly considering misclassification costs. Seventeen measures exhibit both characteristics, fourteen measures exhibited one characteristic, and one measure possessed neither characteristic (the F1 measure). All classification measures (such as classification accuracy and F1) are improper for clinically relevant decision thresholds other than 0.5 or the prevalence. We recommend the following measures and plots as essential to report: AUROC, calibration plot, a clinical utility measure such as net benefit with decision curve analysis, and a plot with probability distributions per outcome category.

Autonomous and semi-autonomous systems are using deep learning models to improve decision-making. However, deep classifiers can be overly confident in their incorrect predictions, a major issue especially in safety-critical domains. The present study introduces three foundational desiderata for developing real-world risk-aware classification systems. Expanding upon the previously proposed Evidential Deep Learning (EDL), we demonstrate the unity between these principles and EDL's operational attributes. We then augment EDL empowering autonomous agents to exercise discretion during structured decision-making when uncertainty and risks are inherent. We rigorously examine empirical scenarios to substantiate these theoretical innovations. In contrast to existing risk-aware classifiers, our proposed methodologies consistently exhibit superior performance, underscoring their transformative potential in risk-conscious classification strategies.

Class imbalance in data presents significant challenges for classification tasks. It is fairly common and requires careful handling to obtain desirable performance. Traditional classification algorithms become biased toward the majority class. One way to alleviate the scenario is to make the classifiers cost-sensitive. This is achieved by assigning a higher misclassification cost to minority-class instances. One issue with this implementation is that all the minority-class instances are treated equally, and assigned with the same penalty value. However, the learning difficulties of all the instances are not the same. Instances that are located in the overlapping region or near the decision boundary are harder to classify, whereas those further away are easier. Without taking into consideration the instance complexity and naively weighting all the minority-class samples uniformly, results in an unwarranted bias and consequently, a higher number of misclassifications of the majority-class instances. This is undesirable and to overcome the situation, we propose a novel instance complexity-based cost-sensitive approach (termed 'iCost') in this study. We first categorize all the minority-class instances based on their difficulty level and then the instances are penalized accordingly. This ensures a more equitable instance weighting and prevents excessive penalization. The performance of the proposed approach is tested on 65 binary and 10 multiclass imbalanced datasets against the traditional cost-sensitive learning frameworks. A significant improvement in performance has been observed, demonstrating the effectiveness of the proposed strategy.

Classification models are a key component of structural digital twin technologies used for supporting asset management decision-making. An important consideration when developing classification models is the dimensionality of the input, or feature space, used. If the dimensionality is too high, then the `curse of dimensionality' may rear its ugly head; manifesting as reduced predictive performance. To mitigate such effects, practitioners can employ dimensionality reduction techniques. The current paper formulates a decision-theoretic approach to dimensionality reduction for structural asset management. In this approach, the aim is to keep incurred misclassification costs to a minimum, as the dimensionality is reduced and discriminatory information may be lost. This formulation is constructed as an eigenvalue problem, with separabilities between classes weighted according to the cost of misclassifying them when considered in the context of a decision process. The approach is demonstrated using a synthetic case study.